Kaesong in happier timesMANY South Koreans suspect that their country’s dream of reunification with destitute North Korea is best kept that way. But in early 2014 the South’s president, Park Geun-hye, began describing reunification as a “bonanza”. It would be a demographic boon, she suggested, marrying the technological know-how of the South, whose population may start shrinking as soon as 2030, to the young northern workforce. Resources, which are plentiful in the North, would help to fuel the South’s exports.
Soon afterwards, three South Korean asset-management firms—HI, Kyobo AXA and Shinyoung—all launched new-fangled “unification funds”: small equity funds that invest in stocks which are expected to gain from unification. Within ten days of opening, Shinyoung’s fund, the largest, had attracted over 9 billion won ($8m); by the end of 2014 it had sucked in 51 billion won, and four other funds held a combined total of 6.5 billion won. Since then, money has been flowing the other way: assets in the small fund managed by HI have halved; 10 billion won has flown out of Shinyoung’s fund.
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